C. You expect the price of GE to not change very much in the next month, so you

Question

C.

You expect the price of GE to not change very much in the next month, so you go short on (sell) a straddle (a put and a call at the same strike) on 100 shares of GE, with a strike price of $27.6. The premiums on the put and the call are each $0.8. If the price at maturity is $27.7, what is your profit from this position?

D.

You buy a futures contract on 5000 bushels of corn, with a strike price of 535 cents per bushel. Lucky for you, the price of corn goes up to 795 cents per bushel. What is your total dollar profit on the contract?

Explanation / Answer

D) Total Change in price per bushel = 795 - 535 = 260 Cents or $2.6
So, total profit = $2.6 x 5,000 = $13,000

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